Drilling Into Oroplata Resources: Looking for Lithium in Teslaas Backyard
GuruFocus.com
- By Christopher Malcolm
Oroplata Resources (ORRP) is a company that has joined the search for lithium in Nevada. For Oroplata Resources and several other junior explorers, the rewards for finding lithium in this particular part of the world are just too good to ignore.
Oroplata Resources owns the Western Nevada Basin project in Southwest Nevada.
The WNB Project covers the south central portion of an area that was first identified as lithium rich by the United States Geological Survey. The project includes 500 mining claims covering approximately 10,000 acres, the company has an option to acquire another 600 mining claims, approximately 12,000 acres.
Oroplata has a 100% interest in the WNB project, which was acquired in exchange for a royalty on future production from the property. Oroplata is a pure exploration company, so the risk level is high for all such companies.
This past week Oroplata announced that it had brought in an experienced miner to oversee the project as CEO:
RENO, NEVADA--(Marketwired - Jun 6, 2016) -Oroplata Resources, Inc., ( ORRP ) is very pleased to welcome Mr. Craig Alford to the position of CEO and a Director of the Company effective immediately. Mr. Alford holds both a Bachelor of Science (Hons) and a Master of Science in Geology. He is a registered Professional Geoscientist (P.Geo) in Ontario and is a Qualified Person, as defined in National Instrument 43-101.
During his 30 years of experience worldwide, Mr. Alford has designed, managed and provided technical direction for projects throughout North and South America, China, Central Asia, Russia, Australia and Africa. Mr. Alford's experience has included senior positions for a number of large mining companies including, Zijin Mining Group, China Railway, and Teck Mining Ltd.
During Mr. Alford's tenure with the Zijin Mining Group he was part of the team that was responsible for an approximate $80 million investment in Pretium Resources Inc. Pretium now has production targeted for its Northern BC, Canada site in 2017. The other major investments Mr. Alford was involved with at Zijin was the $298 million investment into Barrick Gold Porgera mine and the $412 million investment into Ivanhoe Mines Ltds' Kamoa Copper Project. The Kamoa project is expected to be one of the biggest copper mines in the world.
Mr. Alford has negotiated with several Heads of State, as well as assisting the World Bank and the China-Africa Development Fund in tax policy, planning and investment risk.
Mr. Alford stated, "I am delighted to be joining Oroplata at this very exciting and important point in the Company's history. This is a company to watch. The demand for Lithium has only just begun to grow and Oroplata has put together some exceptional Lithium projects in the Southwest U.S., including the Western Nevada Basin Project."
What makes finding more lithium in Nevada so appealing to junior explorers like Oroplata is the close proximity of Teslaas (TSLA) Gigafactory.
With a planned production rate of 500,000 cars per year in the latter half of this decade, Tesla alone will require todayas entire worldwide production of lithium ion batteries. The Tesla Gigafactory was born of necessity and will supply enough batteries to support Teslaas projected vehicle demand.
Source: Tesla Motors
Tesla broke ground on the Gigafactory in June 2014 outside Sparks, Nevada, and expects to begin cell production in 2017. By 2020, the Gigafactory will reach full capacity and produce more lithium ion batteries annually than were produced worldwide in 2013.
The size of the market the electric car is aimed at is astounding
In a new report the International Energy Agency estimates (Global EV Outlook 2016) that 1.26 million electric cars were being used globally in 2015. Below is a chart showing the very rapid growth of both battery electric vehicles (BEVs) and plug-in hybrids (PHEV):
Source: IEA
That is some very rapid growth. What is hard to get your head around is just how small of a dent the electric car has made into the global vehicle market. We are talking about a rounding error on a rounding error.
The chart below details the total number of passenger and commercial cars globally today.
The number is nearly 1.25 billion. 125 million would be 10% of that and 12.5 million would be 1%. That means that the 1.2 million electric cars on the road in 2015 represents one-tenth of one percent of the global car market.
Source: Statista
Normally crazy potential growth stories like this seem too good to be true and are. The thing about the electric car is that it seems almost inevitable that it is going to be what we evolve to for private transportation. Our governments are going to make it so.
Norway will be the first to ban combustion engine vehicles
Norwayas Dagens Naeringslive newspaper recently reported that the country would be banning the sale of combustion engine vehicles by 2025. This isnat yet a law but the proposal seems to have the support of both the ruling and opposition parties.
The fact that Norway itself is going to ban cars that require oil as a primary fuel source isnat big news. The country has only 5 million people. What it is, however, is a sign of things to come.
Eventually the electric car is going to hit the mainstream whether we like it or not.
Norway is not the only government considering a ban of internal combustion vehicles. There is also India and the Netherlands for now considering such moves with more countries certain to come. Whether you personally believe in global warming or not doesn't matter. The governments of the world (and almost every scientist) do, and that is what will dictate future policy.
Look at what lithium prices have done on just 1.2 million electric cars
Given that there is almost undoubtedly exponential growth for electric cars in the coming years, I canat help but wonder what is going to happen to lithium prices. With just over a million electric cars being driven, lithium prices have already skyrocketed. What would happen to lithium prices if we quickly jump to 10 million electric cars (still a rounding error of total global vehicles).
Source: Commodities-now.com
The existing car market is huge for electric cars to target. What we also have to remember is that the number of cars globally is growing and is going to continue to grow for a very long time to come.
The chart below from the World Bank tells a story that words can hardly do justice. It depicts vehicle ownership per thousand people.
Just look at where the developed world is, 400 to 700 cars per thousand depending on the country. Then look at where China and India and their 2.5 billion combined citizens are.
There is massive demand for vehicle growth coming from those countries, and much of that growth is likely to be for electric cars.
The huge growth in electric cars is truly a unique growth opportunity and anyone who controls lithium resource (especially in Nevada) is going to benefit from it. Oroplata is one of a number of junior explorers trying to capitalize on that.
I'll bring you up to speed on more of them in the future. I want to know all of the possible ways to profit from this great long term growth opportunity that is the electric car and lithium.
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